NEWSPAPERS WIN SOME, LOSE SOME IN D.C.

By: Todd Shields Estate Tax Out, Cross-Ownership Ban May Stay


WASHINGTON -- Even as Congress brought the estate tax to the
brink of death last week, Republicans lost control of the Senate,
casting a shadow of doubt over efforts to kill the nation's
newspaper/broadcast cross-ownership ban.

The Senate on Wednesday followed the House in voting to reduce
the estate tax before eliminating it in 2011. Legislative leaders
hurried to ready a bill for signing by a supportive President
Bush.

Newspaper industry leaders were happy despite the far-off repeal
date. "It's a huge win," said John F. Sturm, president of the
Newspaper Association of America, a trade group for daily
newspapers. "Having repeal pass both bodies with the president
ready to sign it is a great thing."

Meanwhile, the decision of U.S. Sen. James Jeffords of Vermont to
leave the Republican Party to become an independent throws
control of the Senate to Democrats, who now assume powerful
committee chairs. At the Commerce Committee, Sen. John McCain, R-
Ariz., a skeptic of federal cross-ownership rules, yields to Sen.
Ernest F. "Fritz" Hollings, D-S.C., a longtime opponent of media
concentration.

The change comes at a critical time. The Commerce Committee
oversees the Federal Communications Commission (FCC), which is
poised to reconsider and possibly repeal its 1975 rule that bars
daily newspapers from owning local TV or radio stations, and vice
versa.

Hollings fended off reviews of the cross-ownership rule in his
last stint as commerce chairman, before elections cost Democrats
control of the Senate in 1994. His office says it's premature to
discuss his new role. Backers of the rule expect him to resume
the battle, using both his perch on the appropriations committee
that controls funding and his chairmanship, which offers no end
of devices to slow or even halt changes at the FCC.

"He's likely to fight very hard," said Andrew Jay Schwartzman,
president of the Media Access Project, which backs ownership
restrictions as a way to assure independent media voices.

But Hollings faces different circumstances than he did last
decade. Powerful U.S. representatives want repeal of the cross-
ownership rule. Federal courts are increasingly skeptical of
ownership restrictions. And Congress itself, in 1996 legislation,
told the FCC to review its rules -- a charge that FCC Chairman
Michael K. Powell, a Republican, is eager to fulfill.

The alignment leaves opponents of the ban with room for optimism.
"I'm not happy, but I'm not alarmed," said one newspaper
executive who watches the cross-ownership battle. The fight is
important because newspapers want to sell their editorial product
not just on newsprint but also over airwaves.

Amid the uproar over the Jeffords jump, House and Senate members
met to iron out differences between their tax bills. House
members wanted greater tax cuts than the Senate had voted. But
the chambers were not far apart on estate-tax relief. Each
envisioned declining rates and increasing exemptions until 2011,
when repeal would occur.

The delay draws attention from repeal opponents, who say the tax
spurs charitable giving and averts the formation of an
aristocracy. Gary L. Bass, executive director of OMB Watch, a
nonprofit public-interest group and a leader of efforts to keep
the tax, promised annual efforts to roll back the repeal.

A continuing battle does not surprise Frank Blethen, publisher of
The Seattle Times, who for years has helped organize anti-
estate-tax forces. They say the estate tax destroys family
businesses, since heirs must sell to meet tax bills ranging up to
55%, and forces unproductive spending on insurance policies and
tax planning. Such expenditures need to continue until repeal
actually happens, Blethen said: "You've got to continue to estate
plan."



Todd Shields (tshields@editorandpublisher.com) is the Washington editor for E&P.



Copyright 2001, Editor & Publisher.